Labour Market Briefing - London Economic Region in September 2016

By Emilian Siman

 

While some people may argue that we are stuck in neutral and the new standard for growth is “slow,” locally in the London Economic (LE) Region things were more intense. The end result might be a “marginal or no growth,” but in between new businesses are rising while others are reducing their activity at a higher pace.

September is usually considered the first month of the fall, a season with implications for many regional industries such as Agriculture, Construction and Education. Therefore, the labour market is expected to respond to these changes.

Table 1 shows that the ”labour force” in the LE Region decreased between August and September of 2016 by about 6,200 people, or by approximately 7,900 people compared to the same month a year earlier. This result is concerning to a certain extent since a comparison between the change August-September 2015 and the change August-September 2016 reveals a significantly larger reduction of the labour force in 2016. “Employment” also decreased between August and September of 2016, by around 4,200 positions, and by about 6,300 positions relative to September of 2015. Comparable results about employment reduction can be viewed for the change August and September of 2015 and for the change between August and September of 2016. What happened?

As Table 1 illustrates, “full-time employment” lost about 7,400 positions in September relative to August of 2016, while “part-time employment” added about 3,300 positions in September relative to August of 2016. This kind of movement is similar to 2015. However, when we look over a year time span, between September 2016 and September 2015, the drop in “full-time employment” is only about 1,700 jobs, while “part-time employment” lost about 4,500 jobs. Looking at these results someone could say that while the employment in LE Region decreased, so has the quality of employment in September of 2016.

Surprisingly, “unemployment” reduced in September by about 2,000 people relative to August of 2016, and by 1,600 people relative to the same month of 2015, an opposite trend compared to a year earlier.

These changes in “employment” and “unemployment” are compensated by movements in the “not in labour force” category. A contingent of about 6,700 people joined the “not in labour force” group in September relative to August of 2016, whereas relative to the month of September 2015, about 12,900 people moved to this group in the LE Region.

There is a reason behind some of these changes. The most popular, the “Baby-Boomer” generation transition to retirement could explain the large change in the “not in labour force” group. Some argue that the variations in the “not in labour force” group is a result of people, who are discouraged by the length of time they’ve been on unemployment, entering and exiting the labour force randomly. The numbers testing this idea are provided in Table 3. One could see a constant reduction of the proportion of “unemployed 27 weeks and over” group over time, an asymptotical approach to 19%. These results should be celebrated, but also they can partially explain the latest changes in the “not in labour force” group.

Another reason for the latest variation in the LE Region labour force could be explained by the entry into a new season: the seasonal effects of the academic year, the harvest season, and the entry on the last portion of the end season for outside work in construction. This hypothesis is consistent with the idea of creation-destruction of part-time jobs and would explain partially the temporary change in the “part-time employment.” All the expected effects of the new season involve new people hired “part-time” for services in Education, for harvesting in Agriculture and for finishing work in Construction.

Another hypothesis is the deep penetration of Technology in all spheres of activity. All business are moving towards higher productivity. This productivity could explain the long-term reduction of the “labour force” size, and “employment” in general.

The intent here is not to be extensive with these hypotheses, but to offer some pointers for further thinking. 

Table 1. Labour force survey characteristics for London Economic Region, [x 1,000 people]

 

Aug-15

Sep-15

Aug-16

Sep-16

change Aug-Sep 2015

change Aug-Sep 2016

change Sep 2015 -Sep 2016

Population

553.6

554.1

558.6

559.1

0.5

0.5

5

Labour force

366.3

365

363.3

357.1

-1.3

-6.2

-7.9

Employment

345.1

340.4

338.3

334.1

-4.7

-4.2

-6.3

Full-time employment

278.5

273.7

279.4

272

-4.8

-7.4

-1.7

Part-time employment

66.7

66.6

58.8

62.1

-0.1

3.3

-4.5

Unemployment

21.1

24.6

25

23

3.5

-2

-1.6

Not in labour force

187.4

189.1

195.3

202

1.7

6.7

12.9

Data source: Statistics Canada, CANSIM, table 282-0122

Note: Statistics Canada rounds these numbers at the closest hundred.

Although there is not much to celebrate, the “unemployment rate” in the LE Region dropped by half a percentage point between August and September of 2016, or by 0.3 of a percentage point relative to the month of September of 2015, see Table 2.

However; “participation rate,” diminished by 1.1 % between August and September of 2016, and by 2 % relative to the month of September of 2015. At the same time, the employment rate dropped by about 0.8 % in a month-to-month comparison (August-September of 2016), or by around 1.6 % in a over-a-year comparison (September 2015 to September 2016).

While the month-to-month variations are expected and can explain the temporary availability of skills on the regional market, you can certify trends and longer-term implications by looking at the changes year-over-year. The hope is that the current tight conditions of the labour market in the LE Region would soon change towards the best. The recent evolution of oil prices and the positive signs of recovery of our largest trading partner, the US, entitle us to be positive in our expectations.

Table 2. Labour force rates for London Economic Region, [%]

 

Aug-15

Sep-15

Aug-16

Sep-16

change Aug-Sep 2015

change Aug-Sep 2016

change Sep 2015 - Sep 2016

Unemployment rate (percent)

5.8

6.7

6.9

6.4

0.9

-0.5

-0.3

Participation rate (percent)

66.2

65.9

65

63.9

-0.3

-1.1

-2

Employment rate (percent)

62.3

61.4

60.6

59.8

-0.9

-0.8

-1.6

Data source: Statistics Canada, CANSIM, table 282-0122

Note: Statistics Canada rounds these numbers at the closest hundred.

Table 3. Unemployment duration

Duration of unemployment

2011

2012

2013

2014

2015

Sep-16

Total unemployed, all weeks (x 1,000)

569.1

573.8

560.3

540.7

502.9

466.1

< than 27 weeks (x 1,000)

414.4

423.9

413.6

402.2

385.3

363.6

27 weeks or more (x 1,000)

137.3

130.4

128.5

123.2

100.6

89.6

Duration unknown (x 1,000)

17.4

19.6

18.1

15.3

17.1

13

27 weeks or more (%)

24.13

22.73

22.93

22.79

20.00

19.22

Data source: Statistics Canada, CANSIM, table 282-0048

Note: Statistics Canada rounds these numbers at the closest hundred.

Among the organisations that made headlines for the local press during the month of September for their intentions of expansion-reduction of activity were: Elgin Middlesex Regional Intermittent Centre, Western University Propel business incubator, Hanwha, Willie’s Cafe, Renix, and St. Anne’s.

 

Hopefully, the richness of the harvesting season will spill out to positively influence all industrial sectors in the region. We’ll come back next month with more news about the labour market. 

 

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This project is funded in part by the Government of Canada and the Government of Ontario.

The views expressed in this document do not nesicarily reflect those of the Government of Ontario.